oh! ok but i am sure 3,1 wont work! since that is most recent ipOds wiht 64, 32 GB..

I am thinking there is a possiblity Apple changed the firmware for this device! since it has some new things like LED display and since drivers and everything would be different there is a possiblity of a firmware like iPod2,2! JUST GUESSING!

click restore in itunes and that would clear everything up on what firmware it downloads along with iPod code 1 , 2 ,3 ?!

I am having the same issue. I bought my 8gb iPod Touch yesterday at Wal-Mart and it had OS 3.1 pre-installed. After numerous failed attempts to downgrade to 3.0 I went ahead and upgraded to 3.1.1 to see if that would help because every video and forum post I read mentioned downgrading from 3.1.1 to 3.0, but that had no effect. When I do a normal restore through iTunes it downloads iPod2,1_3.1.1_7C145_Restore.ipsw so it would appear that the 8gb Touch is still a 2G or whatever assuming the 3G Touches (32GB and 64GB) have a different iPod3,1_3.1.1_XXXXX_Restore. I've tried every angle on both Mac and PC.

Has anyone who bought an 8gb Touch with 3.1 pre-installed managed to downgrade? Or are all the successful downgrades coming from people who were at 3.0 then upgraded to 3.1 then downgraded back to 3.0?